Preparation of the Competitiveness Council of Ministers, Brussels, 11th March 2004 Internal Market, Enterprise, Consumer Protection and Research issues

The EU's Council of Ministers responsible for competitiveness will meet in Brussels on Thursday 11th March at 10.00 under the chairmanship of Ms Mary Harney, Irish Deputy Prime Minister and Minister for Enterprise, Trade and Employment. The European Commission will be represented by Internal Market and Taxation Commissioner Frits Bolkestein, Enterprise and Information Society Commissioner Erkki Liikanen, Health and Consumer Protection Commissioner David Byrne and Research Commissioner Philippe Busquin.

Proposed Directive on Services (JT)

Commissioner Bolkestein will present the Commission's proposal for a Directive to create a real Internal Market in services by cutting administrative burdens and excessive red tape at national level that can currently prevent businesses from offering their services across borders or from opening premises in other Member States (see IP/04/37 and MEMO/04/03).

The Commissioner will draw Ministers' attention to the proposed Directive's potential as the biggest boost to the Internal Market since its formal launch in 1993 and its crucial importance if the EU is to have a chance of meeting the ambitious competitiveness targets set at the Lisbon European Council in March 2000. He will welcome the Irish Presidency's view that the Council should reach agreement on the proposal before the 2005 Spring Council and its insistence that the negotiations should remain focused on the overarching objective of improving competitiveness. He will emphasise the importance of ensuring that negotiations do not get bogged down by special pleadings on behalf of vested interests.

By encouraging cross-border economic activity and boosting competition, the proposed Directive would increase choice, improve quality and bring down prices for consumers and also for businesses which use services. It covers a wide range of different service activities, representing around 50% of economic activity, which so far have not benefited from the Internal Market legal framework. Mr Bolkestein will tell the Council that whilst this wide scope may make the negotiations challenging, it is only by taking a comprehensive approach that the EU can liberate service providers from the barriers which still hamper them. He will make clear once again that the Directive does not cover public services, or require Member States to liberalise or privatise public services or to abolish monopolies where they exist.

He will urge Ministers to grab the opportunity to demonstrate that the Competitiveness Council can rise to the challenge of dismantling protectionism and red tape, in order to free service businesses to give their customers better quality and choice and to create the sustainable jobs Europe needs.

Community Patent (JT)

The Council will seek to reach agreement on the proposed Regulation creating a Community Patent. An agreement on the broad outlines was reached in March 2003 (see MEMO/03/47) and further progress was made towards overall agreement at the November 2003 Council. However, a small number of points remain outstanding, in particular on requirements for the translation of patents and on how infringements of patents which might arise as a result of mistranslations should be treated.

The Irish Presidency has now tabled two alternative texts aimed at resolving these issues. Mr Bolkestein will thank the Presidency for its efforts and urge Ministers to put their differences into perspective and resolve them at this meeting, in the light of European industry's urgent need for more affordable patents covering the whole Union and of Europe's need to boost incentives for research and innovation, if it is to compete better with the US and Japan.

He will remind the Council that agreement on the draft Regulation is needed now so that it can be returned to the European Parliament for its opinion before the elections and so that the EU can meet its commitment to propose revisions to the European Patent Convention, taking account of the Community Patent, in time for the Diplomatic Conference planned for November this year in Munich.

The Community Patent would considerably boost innovation by encouraging research and development in Europe, and so foster long-term competitiveness. The cost of obtaining a Community Patent under the current draft text would still be very much cheaper than the current cost of obtaining a European Patent, even if it would be higher than under the Commission's original proposal. Instead of paying translation costs of more than €10 000 for an average European Patent valid in just eight countries, firms' translation costs would be half that, €5 000 for a Community Patent valid in 25 countries.

In addition to the lower costs, Community Patent holders would benefit from far greater legal certainty, because disputes over interpretation would be heard before a single Community Patent Court with pan-EU jurisdiction (see also IP/04/137). A European Patent can currently be challenged in each and every country in which it is valid, which can give rise not only to uncertainty and potentially divergent interpretations but also to higher costs.

Mr Bolkestein will express his satisfaction at the European Parliament's approval on 9 March of the proposal for a Directive on the enforcement of intellectual and industrial property rights, such as copyright and related rights, trademarks, designs or patents (see IP/04/316). The Directive would require all Member States to apply effective, dissuasive and proportionate remedies and penalties against those engaged in counterfeiting and piracy and so create a level playing field for right holders in the EU.

The Parliament approved a compromise text already informally agreed by the Council following detailed discussions and close cooperation between all three Institutions. The Council is due to formally adopt the Directive definitively without further discussion in the coming weeks, once the text has been translated into the EU's working languages.

The Commissioner will observe that agreement has been achieved within just over a year of the Commission putting forward its proposal at the end of January 2003 (see IP/03/144 and MEMO/03/20) thanks to the recognition by all parties of the importance of combating counterfeiting and piracy and to the excellent cooperation among the Institutions involved.

Competitiveness Council's contribution to the Spring European Council (PS)

The Competitiveness Council is expected to adopt its input to the Spring European Council. The Commission welcomes the draft Key Issues Paper and appreciates that the text reflects the spirit of the integrated approach to competitiveness, set out in its Communication of last November (see IP/03/1568).

Stimulating Entrepreneurship (PS)

Ministers are expected to adopt Council conclusions on "stimulating entrepreneurship" focusing on:

improving education and training for entrepreneurship,

improving the regulatory environment,

supporting and facilitating access to finance for entrepreneurs (see IP/03/1635),

identifying appropriate indicators of performance and progress in view of setting targets for increased entrepreneurship,

examining the Report on the implementation of European Charter for Small Enterprises (see IP/04/283) in the light of the priorities identified in the Entrepreneurship Action Plan (see IP/04/284). This follows the successful conference organised by the Commission on its entrepreneurship day on 2 March

The Presidency will present its progress report on the new EU regulatory framework for chemicals proposed by the Commission on 29 October 2003 see IP/03/1477). The progress report, which summarises the progress made by a Council Ad-hoc Working Party on the Commission proposal, was also presented to the Environment Council on 2 March. Under the proposed new system, REACH (Registration, Evaluation and Authorisation of Chemicals), enterprises that manufacture or import one tonne or more of a chemical substance per year would be required to register it with the new Chemicals Agency. The aims of the proposed new Regulation are to improve the protection of human health and the environment, while maintaining the competitiveness and innovative capacity of the EU chemicals industry.

Ministers are expected to adopt the proposal for a Council Regulation concerning a one year prolongation of the Temporary Defensive Mechanism (TDM).

Background: Unfair Korean business practices led to a request for dispute settlement with the WTO since an amicable agreement with South Korea was not possible. A temporary defensive mechanism had been brought into force and aid could be authorised for certain market segments and for a limited period. The prolongation by one year of the TDM is to bring its application in line with the expected duration of the WTO proceedings.

Operating environment for business-related services industries (PS)

Two topics are brought together under this agenda point:

Ministers are expected to adopt Council conclusions on the Commission's Communication on business-related services adopted last 4 December 2003 (see IP/03/1655). The draft Council conclusions reiterate the important role of such services in the European economy in the context of the Lisbon strategy and the integrated strategy for competitiveness, welcome the Communication and stress the link with the proposed Directive on services in the Internal Market.

Furthermore, they are likely to welcome plans by the Commission to establish a European Forum on business-related services and to develop an Action Plan drawing on the work of that Forum to be presented to the Council early in 2005. The draft Council Conclusions put particular emphasis on actions related to the internal market and competitive framework conditions, learning and skills, better understanding of linkages between business-related services and other sectors of the economy, improved statistical information, R&D and innovation, standards and the development of regional and local markets. For more information: http://ec.europa.eu/enterprise/services/business_related_services/index_brs.htm

Consumer protection co-operation: No hiding place for rogue traders (TM)

The Council Presidency will present a progress report on a Commission proposal for a regulation on consumer protection cooperation (see IP/03/1067). Cross-border problems are growing as rogue traders adapt to new technologies and opportunities. The aim of the proposed regulation is to enable national authorities to exchange information and cooperate with counterparts in other Member States as easily and seamlessly as with other authorities in their own country. The regulation will guarantee that each Member State effectively enforces EU law in its territory on behalf of all European consumers. Once it enters into force, unscrupulous traders will no longer be able to evade consumer protection authorities by targeting consumers living in other EU countries. Health and Consumer Protection Commissioner David Byrne said: "We know that consumers are reluctant to shop in other EU countries if they feel their rights are not going to be protected. Co-operation between national consumer protection authorities is the best way to catch these cross-border rogue traders. This, coupled with common rules guaranteeing high standards of consumer protection EU-wide, can help give consumers and honest businesses the confidence they need to take full advantage of the Internal Market."

Basic research (FF)

The Competitiveness Council will discuss the Commission Communication "Europe and basic research". The Communication aims to encourage international and European scientific co-operation to further the excellence of basic research in Europe. The Council's draft conclusions will consider ways of enhancing Europe's levels of creativity and excellence in basic research by potentially creating a new facility involving the European scientific community, with specific funding for basic research. Reaffirming the importance of private sector involvement in European basic research, providing suggestions on how to strengthen Europe's research performance and supporting transfer of knowledge and co-operation between researchers and entrepreneurs are also likely to be included.

European Space Policy (FF)

The Council will also discuss the EU White Paper on space policy, which aims to promote Europe's independent access to space and space technology as well as attracting more young people into science careers and strengthening European excellence in space science. The Council will also address progress following the Commission Communication on GMES, the EU "Global Monitoring for the Environment and Security" initiative.

Ministers at the Council will exchange views on a series of questions involving the Space White Paper priorities such as the respective roles and responsibilities of the EU and the European Space Agency (ESA) and the time scale and approach to further short-term space initiatives, possibly via an informal "Space Council". Ministers will also discuss which lines of action the Commission could begin work on this year and the approach the Commission should adopt for space projects included under the "Quick Start initiative", such as GMES.

Input from the Competitiveness Council to the Spring Council (FF)

At the heart of the challenge to meet the March 2000 Lisbon Council goal, of turning Europe into the most dynamic knowledge-based economy in the world, is the promotion of conditions which foster research and innovation. Key steps in this direction involve the implementation of the EU action plan to raise investment to 3% of EU average Gross Domestic Product by 2010.

ITER (FF)

During lunch, European Research Commissioner Philippe Busquin will also present Ministers with the state of play of negotiations on the ITER (International Thermonuclear Experimental Reactor) research project on nuclear fusion energy. ITER will provide a major step forward for the advancement of fusion science and technology on the way towards fusion electricity production. The European Union, Japan, Russia, China, South Korea and the United States are partners in the negotiations to jointly construct and operate ITER. The construction of ITER is estimated to cost around €4.5 billion.

The main outstanding issue is the choice between the European candidate site of Cadarache (France), which is unanimously backed by the EU Council of Ministers, and the other candidate site of Rokkasho-Mura in Northern Japan. Consensus could not be reached at a Ministerial meeting held in Washington on December 20th 2003, nor at a further technical meeting held in Vienna on February 21st 2004. ITER partners are therefore further considering the characteristics of the two candidate sites, while also exploring the potential for consensus on a broader approach including other complementary elements of nuclear fusion research.

The Commission is actively contributing to these discussions in order to reach a consensus for ITER in Europe, in line with its negotiation mandate and the Council's unanimous support.